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What Makes a Sportsbook Succeed or Fail?

April 18, 2014

A sportsbook is like any other business. If you treat your customers well, market the product well and have someone trustworthy handling the finances, the sportsbook can be profitable. The most important aspect of building a successful sportsbook – online or offline – is a great marketing strategy. Since most sportsbooks in the US are located in Nevada, there is a ton of competition. Ditto for the online sportsbooks. So if a sportsbook is going to make money, they better devise a marketing strategy that stands out from the rest.

Brick and mortar sportsbooks: Reasons for failure or success

There are many excellent sportsbooks in Las Vegas, but they don’t really make the casino much money compared to table games and slots. The reason for that is because the house edge is minimal, if any at all. Skilled sports bettors have an edge over the house, similar to a person that can effectively count cards in blackjack. When a sports bettor isn’t skilled, the edge still isn’t high in the house’s favor. You could throw darts to pick winners and would win 50% of the games. 50% winners ATS is a loss for the player, but not a significant amount.

So how do casino sportsbooks make money or lose money? They make money by attracting a high percentage of tourists. The average tourist is going to lose more than they win. Sportsbooks want tourists instead of the skilled sports bettors. They also want to attract tourists that have money. If you’re betting $5 a game, the sportsbook couldn’t care less about you. That’s why most of the sportsbooks only give drink comps to the heavy bettors. How does a sportsbook attract the right target market? Attractive cocktail waitresses and lots of big, shiny HDTV’s.

Online sportsbooks: Reasons for failure or success

It is even more competitive online. There are hundreds of online sportsbooks and most of them, well…they suck. But there are some excellent ones as well (see our list of top online sportsbooks). I’ve seen dozens of online sportsbooks come and go quickly. They pop up, claim to be the greatest thing since sliced bread, and then flame out 6 months later. There are many reasons so many online sportsbooks eventually flame out.

The first mistake made is to payout winnings at a snails pace. No one wants to wait months to receive a payout. Once word gets around that the sportsbook is slow to payout, the site is doomed. And that leads me to my next point. Online sportsbooks with limited reserves will struggle. The reason many sites are slow to payout winnings is because they don’t have enough money in reserves to handle tons of players cashing out all at once. It takes a hefty bankroll to operate an online sportsbook. Most don’t have what it takes.

Marketing the website on the cheap is another cause of disaster. An online sportsbook absolutely must hire quality Internet Marketing firms to get the word out about the site. Also, if negative reviews get out about the site, the marketing team hired needs to clean up the mess. An online sportsbook should never be built on the cheap. You got to have money to make money.

Online sportsbooks that are successful are the complete opposite. They spend the money on software developers and programs to create an appealing, secure website. Then they hire a talented marketing team to get the word out and create some competitive bonus programs for members. After that, it’s all about making timely payouts, responding to customer questions quickly and, of course, putting up pictures of hot chicks in skimpy outfits on the website!